FM says that the tax proposals would bring ease of compliance and reduce litigation. Nirmala Sitharaman says a new personal income tax regime would be reduced who forego deductions and exemptions.
A tax of only 10 per cent will be charged to Rs 5 lakh-7.5 lakh income as against prevailing 20 per cent rate. From Rs 7.5 lakh-10 lakh income, a tax rate of 15 per cent against 20 per cent prevailing rate.
For income Rs, 10-12.5 lakh, a rate of 20 per cent will be charged as against 30 per cent earlier. For income between Rs 12.5 lakh-15 lakh will be taxed at 25 per cent as against 30 per cent.
For those at Rs 15 lakh plus income, the tax will be 30 per cent.
The government has slashed the income tax rates to 10% from existing 20% for those earning between Rs 5 lakh to 7.5 lakh and 15% for those earning between Rs 7.5 lakh and 10 lakh as compared to the existing 30%. For earnings between Rs 10 lakh to 12.5 lakh, the tax rates have been slashed to 20% tax from existing is 30%.
How is the new income tax regime as per Union Budget 2020 different?
While the new income tax structure reduces the tax a salaried employee would pay on his/her income, there is a major ‘conditions apply’. FM Sitharaman said that the old tax regime, with its higher income tax rates, will continue to exist. The new income tax regime will be optional.
What this means is that if you choose to be part of the new income tax regime, you will pay lesser income tax but you won’t be able to claim any rebate or exemption.
Union Budget 2019/2020 Income Tax Comparison:
| Income Tax Slabs | New Tax Rate | Earlier Tax Rate |
| Upto Rs 5 Lakh | NIL | NIL |
| Rs 5 Lakh- Rs 7.5 Lakh | 10% | 20% |
| Rs 7.5 Lakh- Rs 10 Lakh | 15% | 20% |
| Rs 10 Lakh- Rs 12.5 Lakh | 20% | 30% |
| Rs 12.5 Lakh- Rs 15 Lakh | 25% | 30% |
| Rs 15 Lakh and above | 30% | 30% |
